Pan American Fire & Casualty Co. v. Revere
188 F.Supp. 474 (E.D. La. 1960)
- A truck hit a schoolbus, killing a bunch of people. Some other cars couldn’t stop in time and got into a secondary accident, injuring more people. A bunch of people started suing the owner of the truck, or more accurately the insurance company that insured the truck (Pan American).
- Pan American instituted an interpleader action. They basically said that they insured the truck owner for a maximum of $100k. They put the $100k in escrow and asked the Court to join all of the lawsuits into one, and tell Pan American who to give what % of the $100k to. One of the claimants (Revere) made a motion to dismiss.
- Btw, Pan American (and the truck owner) also denied all liability to the claimants. Admitting liability would amount to a concession that the driver was negligent and that would expose them to very large personal liability judgments.
- The Federal Trial Court found for Pan American and allowed the case to proceed.
- The Trial Court recognized that the idea of an interpleader is that someone is in danger of being compelled to pay the same debt twice. That is not what this case is about. Here Pan American is trying to use the interpleader rules because they have a fixed the limits of liability.
- Basically, although Pan American might be forced to pay multiple claims to multiple people, they never have to pay the same claim twice. Each claim is independent.
- However, the Court found that an insurer with limited contractual liability who faces claims in excess of his policy limits is “exposed” to paying more than what they are legally required to pay, so that should count under Rule 22.
- If the claims were allowed to proceed as different cases, each court could order Pan American to pay $100k to each defendant.
- These are unliquidated tort claims, and at the Time Revere made his motion the Court had no way of knowing how much recovery each plaintiff would eventually get.
- Some of the claimants had already sued in State Court, but the Trial Court ruled that they had the authority to take those cases out of State Court and join them into the Federal proceeding under 28 U.S.C. § 2283(2).
- 28 U.S.C. § 2283(2) allows a Federal Court to stop a State Court from hearing a claim related to an interpleader, “Where the issuance of an injunction by the Federal Court is necessary in aid of its jurisdiction”
- There are two mechanisms one can use for initiating an interpleader. Using 28 U.S.C. § 1335 is a stautory interpleader. The other uses Rule 22, and is a rule interpleader. Since this case was brought using Rule 22, it was debatable whether you could invoke provisions of 28 U.S.C. § 1335 like this. The Court found they could.
- Then the Court ruled that, according to Rule 22, the lawsuit could only be brought in Texas (where Pan American was located) and could not join anyone outside of Texas jurisdiction. Unfortunately, most of the claimants were from other States. But, that jurisdictional issue does not apply for 28 U.S.C. § 1335 lawsuits. So, the Court changed the basis of the lawsuit from a Rule 22 action to a 28 U.S.C. § 1335 action and allowed the lawsuit to proceed.